Art Carden  

The Present and the Future Both Need Bastiat

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I agree with Bryan: Frederic Bastiat's essay "What is Seen and What is Not Seen" is "the pinnacle of profundity." Indeed, on re-reading Bryan's post on Bastiat from last summer, I realized he wrote most of what I was planning to write. Specifically, arguments that play well with the electorate on issues like immigration and regulation are simply wrong. I'll quote Bryan on his life before economic enlightenment:

Every teacher and book I ever encountered treated naive populism like the Law of Gravitation. Evil businesses aren't paying workers enough? Raise the minimum wage; problem solved. The elderly are poor? Increase Social Security payments; problem solved. Evil businesses are selling people bad drugs? Impose more government regulation; problem solved.

If you favor these programs, you can call these arguments straw men. But I assure you: These "straw men" were never presented by opponents of these policies. On the contrary, these "straw men" were invariably presented by people who favored these policies. How is that possible? Because during my first 17 years of life, I never encountered an opponent of any of these policies! You might assume I was grew up in a weird Berkeley-esque leftist enclave, but bland Northridge, California hardly qualifies.

What was going on? The best explanation is pretty simple: I only heard straw man arguments in favor of populist policies because virtually everyone finds these straw man arguments pleasantly convincing. Regardless of the merits of the minimum wage, Social Security, and the FDA, economic illiteracy is the reason for their popularity. If someone like Bastiat convinced people that the pleasantly convincing arguments are inane, proponents would have to fall back on arguments that are intellectually better yet rhetorically inferior.

This could be availability bias, but in my writing for and speaking to general audiences on basic economics I find that people cling passionately to arguments that Bastiat (or Adam Smith, or...) refuted over a century and a half ago. Bastiat is needed as much as ever in a world where most policy debates are about as serious as this clip from one of my favorite episodes of South Park:

In spite of this, I drift toward optimism about our intellectual future. Here's one reason. The Institute for Humane Studies is trying to elevate the discussion with its LearnLiberty.org video project.* One of my videos discusses the Broken Window Fallacy:

*-Disclosure: I work as an Adjunct Program Officer for IHS and have received compensation for appearing in LearnLiberty.org videos. I get no payola for mentioning them on this site.



COMMENTS (11 to date)
Thomas E. Snyder writes:

I use your video on day 1 of my ECON 1301 classes. After going over the syllabus I cover "I, Pencil" and "Economics in One Lesson", briefly, of course.

Tom West writes:

Regardless of the merits of the minimum wage, Social Security, and the FDA, economic illiteracy is the reason for their popularity.

I would contest that. I would say that economically illiterate arguments are made to justify policies that people would genuinely like to have in place for reasons other than economics.

Because as a society we worship at the throne of rationality, many feel obligated to make economically incorrect arguments to justify their preferred policy to appease the need for the appearance of rationality, when the honest answer would be that the economic reasons against policy A are simply not as important as my preferences FOR policy A.

It's the same story with morality. Morality isn't generally used to decide upon a policy. It's simply used as a tool to justify one's preferred policy.

MikeP writes:

I would contest that.

How about "economic illiteracy is the reason they and their advocates are not roundly mocked"?

Tom West writes:

How about "economic illiteracy is the reason they and their advocates are not roundly mocked"?

Actually improving economic literacy might it make it clearer that an economist suggesting a policy should be given no more weight than a physicist suggesting whether we should build skyscrapers.

Both contribute by providing us with the *parameters* for debate, but their *values* are simply those of just another citizen, and worth just as much, no more, and certainly no less.

Personally, I have wondered whether economic illiteracy gives economists more sway in society than they would normally have. Economic illiteracy allows many to confuse their policy preferences as some form of natural law rather than the expression of their personal values that they often are.

MingoV writes:
I drift toward optimism about our intellectual future.
The belief that a video project will improve our intellectual future is equivalent to a belief that Carl Sagan's Cosmos series reduced the number of people believing in astrology.

Most adults know nothing about economics. Few have any desire to learn about economics. The obvious approach is to educate the children. Tennessee, for example, requires a semester of economics in high school. Unfortunately, the assigned textbook had factual errors, misinterpretations of historic events, and a marked left-wing bias. Also, because everyone had to pass the course to graduate, the course was presented at a 7th grade level.

Higher education is more about signaling than learning. Few students take economics courses. Those that do are presented with a watered-down intro course with a high likelihood of errors and biases. I'm pessimistic about our intellectual future.

Tom West makes a point above that is similar to one that Frank Meyer made long ago and that is worth repeating (and something I myself have noted many times, even before I read this Meyer piece):

http://pileusblog.wordpress.com/2012/07/08/sunday-morning-quotations-meyer-on-economists/

This should not be seen as a slam on economists, btw. What they do is mighty enough, as I note.

Good to see West make a similar point, though his may be a bit stronger.

MikeP writes:

Actually improving economic literacy might it make it clearer that an economist suggesting a policy should be given no more weight than a physicist suggesting whether we should build skyscrapers.

Good analogy.

Similarly, a climate scientist suggesting a policy on reducing the use of carbon fuels should be given no more weight than a physicist suggesting whether we should build skyscrapers.

Also similarly, all those Keynesian economists who seem to be the entirety of the spectrum understood by politicians and the media suggesting a policy of monetary or fiscal stimulus should be given no more weight than a physicist suggesting whether we should build skyscrapers.

Or is your advice intended only for those who just happen to think that policy itself is not always the best option?

MikeP writes:

Incidentally, where the analogy falters is that the physicist is more qualified than most to suggest what materials and what designs might improve the skyscraper or make it possible. Can he decide to tax someone to build it? Of course not. But he can suggest that a skyscraper made of a steel frame covered in a surface of masonry will be higher, stronger, and more useful than a skyscraper made entirely of masonry.

Similarly, the economist who views his job as bringing the unseen to light can suggest that a minimum wage will disemploy people: they just happen to be different from the seen people the minimum wage is intended to help. It's not his policy to decide, but he at least can tell those whose policy it is to decide that there is a cost so they can take it into consideration.

Tracy W writes:

Tom West: but if people make bad arguments it's because they expect other people to be convinced by them.
Notably, contra to public choice theory, I haven't persuaded the government to give me 5 cents from every person in the country despite the trivial costs to each individual and large benefits to myself because the self-interest in that policy is very obvious. And people do get very worked up, at least in Anglosphere countries, when they discover that a government employee or politician has been stealing money, much more than they do about much bigger but subtler wastes, implying that people do evaluate reasons, however poorly.

Tom West writes:

Tom West: but if people make bad arguments it's because they expect other people to be convinced by them.

Agreed. I thought WW's article on the Economist web site about 'fairness' was illuminating. It's a bargaining position, not a moral position.

However, I don't expect much change. Reality would require evaluating dozens of different criteria against each other, many of which are "squishy". Far easier to pretend there's only one relevant metric, and then use illogic/illiteracy to pretend that my side triumphs using that metric.

Tom West writes:

MikeP, I agree with your physicist point, it was the point I was trying to make (what materials? - yes, should we build? - no)

The minimum wage debate is interesting. I agree that the (rather slight) disemployment effects *are* something that economists should bring up. What I disagree with is that minimum wage is mostly an economics debate. It has far reaching social ramifications that affect how we view our fellow citizens. I feel that the "squishy" social factors aren't acceptable in modern debate about these issues, so we yell about the numbers, quoting studies to meet our needs.

As for climate scientists. That's *very* interesting. The truth as I see it is that AGW is real, it will harm some poor nations horribly, and it is unlikely to hit us heavily. Meaningful mitigation on our part is uncertain to work, and almost certainly going to decrease our standard of living compared to doing nothing.

However, the self-image of us telling the poor nations of the world "too bad, so sad" is too much for us. The reality that our standard of living is more important to us than the countless lives of the poor is just too bitter a pill. (Admittedly, we'll probably do a few cosmetic changes, but that's about it.)

Consequently, climate scientists *have* to be attacked for their science, not for their views, because we can't handle the truth that we're not willing to do anything. I have a lot more respect for the honesty that says, "yes, we're bastards" than I do for those who insist on pretending it ain't so.

Of course, there are reasons I'd never make it as a politician :-).

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